Changes from report parliamentary committee draft to plenary report

Added‘4. In the event of withdrawal of authorisation, Member States shall ensure that insurance and reinsurance undertakings continue to be subject to the general rules and objectives of the insurance supervision set out in Title I, Chapter III, until any winding-up proceedings are opened.’;

Added(54) in Title I, the following chapter is inserted:

Added‘CHAPTER VIIA Macroprudential tools

Added1. Member States shall ensure that the liquidity risk management of insurance and reinsurance undertakings referred to in Article 44(2), point (d), ensure they maintain adequate liquidity to settle their financial obligation towards policyholders and other counterparties when they fall due, even under stressed conditions.

Added2. For the purpose of paragraph 1, Member States shall ensure that insurance and reinsurance undertakings draw up and keep up to date a liquidity risk management plan projecting the incoming and outgoing cash flows in relation to their assets and liabilities. Member States shall ensure that insurance and reinsurance undertakings develop and keep up to date a set of liquidity risk indicators to identify, monitor and address potential liquidity stress.

Added3. Member States shall ensure that insurance and reinsurance undertakings submit to the supervisory authorities the liquidity risk management plan▌.

Added4. Member States shall ensure that▌low-risk profile undertakings pursuant to Article 29c and insurance or reinsurance undertakings which have obtained prior approval from the supervisory authority pursuant to Article 29d are not obliged to draw up a liquidity risk management plan as referred to in paragraph 2 of this Article.

Added5. Member States shall ensure that, where insurance and reinsurance undertakings apply the matching adjustment referred to in Article 77b or the volatility adjustment referred to in Article 77d, they may combine the liquidity risk management plan referred to in paragraph 2 of this Article with the plan required in accordance with Article 44(2), third subparagraph.

Added6. In order to ensure consistent application of this Article, EIOPA shall develop draft regulatory technical standards to further specify the content and the frequency of update of the liquidity risk management plan.

AddedEIOPA shall submit those draft regulatory technical standards to the Commission by [OP please add date = 12 months after entry into force].

AddedPower is conferred on the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

AddedArticle 144b Supervisory powers to remedy liquidity vulnerabilities in exceptional circumstances

Added1. As part of the regular supervisory review process, supervisory authorities shall monitor the liquidity position of individual insurance and reinsurance undertakings. Where they identify material liquidity risks, they shall inform the concerned insurance or reinsurance undertaking of this assessment. The insurance or reinsurance undertaking shall explain how it intends to address those liquidity risks.

Added2. Member States shall ensure that supervisory authorities have the necessary powers to require undertakings to reinforce their liquidity position when liquidity risks or deficiencies are identified. Such powers shall be applied where there is sufficient evidence regarding the existence of liquidity risk vulnerabilities and the absence of effective remedies taken by the insurance or reinsurance undertaking.

AddedThe measures taken by supervisory authorities on the basis of this paragraph shall be reviewed at least every six months by the supervisory authority and be removed when the undertaking has taken effective remedies.

AddedWhere relevant, the supervisory authority shall share the evidence of liquidity risk and vulnerabilities with EIOPA.

Added3. Member States shall ensure that, in relation to individual undertakings facing extreme liquidity risks or an imminent risk of non-compliance with their Solvency Capital Requirement that may cause a severe and imminent threat to the protection of policyholders or to the stability of the financial system, supervisory authorities have the power to temporarily:

Added(a) restrict or suspend dividend distributions to shareholders and other subordinated creditors;

Added(b) restrict or suspend other payments to shareholders and other subordinated creditors;

Added(c) restrict or suspend share buy-backs and repayment or redemption of own fund items;

Added(d) restrict or suspend bonuses or other variable remuneration;

Added(e) suspend redemption rights of life insurance policy holders..

AddedThe power to suspend redemption rights shall only be exercised in exceptional circumstances, as a last resort measure and where this is in the collective interest of policyholders. Before exercising such a power, the supervisory authority shall take into account potential unintended effects on financial markets and on the rights of policyholders, including in a cross-border context. Supervisory authorities shall make the justification for the application of those powers public.

AddedThe application of the measure referred to in the first subparagraph shall last no more than three months. Member States shall ensure that the measure can be renewed if the underlying reasons that justify it are still present and it is no longer applied when those reasons are no longer present.

AddedWithout prejudice to Article 144c (6), Member States shall ensure that▌ insurance and reinsurance undertakings concerned shall not make distributions to shareholders and other subordinated creditors, and shall not pay bonuses or other variable remuneration where such pay is fully under the discretion of the undertaking, until the suspension of redemption rights is lifted by the supervisory authorities.

AddedMember States shall ensure that supervisory authorities have the necessary powers for this purpose.

AddedMember States shall ensure that authorities with a macroprudential mandate, where different from the supervisory authorities, are duly and timely informed of the supervisory authority's intention to make use of the power referred to in this paragraph, and are fully involved in assessing the potential unintended effects referred to in the second subparagraph.

AddedMember States shall ensure that supervisory authorities shall notify EIOPA and ESRB whenever the power referred to in this paragraph▌ is exercised to address a risk for the stability of the financial system.

Added3a. The application of the measures referred to in paragraph 3 of this Article shall duly take into account the proportionality criteria referred to in Article 29(3), and the existence of any preventively agreed risk tolerance limits and thresholds for internal capital planning.

AddedWhere, after consulting the ESRB, EIOPA considers that the exercise of the power referred to in paragraph 3 by the competent authority is excessive, it shall issue an opinion and recommend the supervisory authority concerned to review its decision.

Added3b. The application of measures referred to in paragraph 3 of this Article shall take into account the evidence resulting from the supervisory process and a forward-looking assessment of the solvency and financial position of the undertakings concerned, in line with the assessment referred to in Article 45(1), second subparagraph, points (a) and (b).

Added4. The power referred to in paragraph 3 may be exercised in relation to▌ undertakings operating in that Member State where the exceptional circumstances referred to in paragraph 3 affect the whole or a significant part of the insurance market.

AddedMember States shall appoint an authority to exercise the power referred to in this paragraph.

AddedWhere the appointed authority is different from the supervisory authority, the Member State shall ensure proper coordination and exchange of information between the different authorities. In particular, authorities shall be required to cooperate closely and to share all the information that may be necessary for the adequate performance of the duties entrusted to the authority appointed pursuant to this paragraph.

Added5. Member States shall ensure that the authority referred to in paragraph 4, shall notify in due time EIOPA and, where the measure is taken to address a risk to the stability of the financial system, the ESRB of the use of the power referred to in paragraph 4.

AddedThe notification shall include a description of the measure applied, its duration, and a description of the reasons and risks that motivated the use of the power, including the reasons why it was considered effective and proportionate in relation to its negative effects on policyholders.

Added6. In order to ensure consistent application of this Article, EIOPA shall, after consulting the ESRB, develop draft regulatory technical standards to further specify:

Added(a) the measures to address deficiencies in liquidity risk management and on the form, activation and calibration of powers that supervisory authorities may exercise to reinforce the liquidity position of undertakings when liquidity risks are identified and are not adequately remedied by these undertakings;

Added(b) ▌the existence of exceptional circumstances that may justify the temporary suspension of redemption rights;

Added(c) ▌the conditions for ensuring the consistent application of the temporary suspension of redemption rights across the Union and the aspects to consider for equally and adequately protecting policyholders in all home and host jurisdictions.

AddedEIOPA shall submit those draft regulatory technical standards to the Commission by ... [OP please add date = 12 months after entry into force].

AddedPower is conferred on the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1094/2010.

AddedArticle 144c Supervisory measures to preserve the financial position of undertakings during exceptional sector-wide shocks

Added1. Without prejudice to Article 141, Member States shall ensure that supervisory authorities have the power to take measures to preserve the financial position of individual insurance or reinsurance undertakings during periods of exceptional sector-wide shocks that have the potential to threaten the financial position of the undertaking concerned or the stability of the financial system.

Added2. During periods of exceptional sector-wide shocks, supervisory authorities shall have the power to require undertakings with a particularly vulnerable risk profile to take at least the following measures:

Added(a) restrict or suspend dividend distributions to shareholders and other subordinated creditors;

Added(b) restrict or suspend other payments to shareholders and other subordinated creditors;

Added(c) restrict or suspend share buy-backs and repayment or redemption of own fund items;

Added(d) restrict or suspend bonuses or other variable remuneration.

AddedMember States shall ensure that the relevant national bodies and authorities which have a macroprudential mandate are duly informed of the national supervisory authority's intention to make use of this Article, and are appropriately involved in the assessment of exceptional sector-wide shocks in accordance with this paragraph.

Added3. The application of the measures referred to in paragraph 2 of this Article shall duly take into account the proportionality criteria referred to in Article 29(3), and the existence of any preventively agreed risk tolerance limits and thresholds for internal capital planning.

Added4. The application of measures referred to in paragraph 2 of this Article shall take into account the evidence resulting from the supervisory process and a forward-looking assessment of the solvency and financial position of the undertakings concerned, in line with the assessment referred to in Article 45(1), second subparagraph, points (a) and (b).

Added5. The application of the measures referred to in paragraph 2 shall last for as long as the underlying reasons that justify the measure are present. Those measures shall be reviewed every three months and shall be removed as soon as the underlying conditions that motivated the measures are over.

Added6. For the purpose of this Article, significant intra-group transactions referred to in Article 245(2) including intra-group dividend distributions, shall only be suspended or restricted where they are a threat to the solvency or liquidity position of the group or of one of the undertakings within the group. The supervisory authority of a related undertaking shall consult the group supervisor before suspending or restricting transactions with the rest of the group.

Added7. In order to ensure consistent conditions of application of this Article, EIOPA shall, after consulting the ESRB, develop regulatory technical standards to specify the existence of exceptional sector-wide shocks.

AddedEIOPA shall submit those draft regulatory technical standards to the Commission by [OP please add date = 12 months after entry into force].

AddedPower is conferred on the Commission to adopt those regulatory technical standards in accordance with Article 10 to 14 of Regulation (EU) No 1094/2010.’;

Added(55) in Article 145, paragraph 2 is amended as follows:

Added(a) point (c) is replaced by the following:

Added‘(c) the name of a person who possesses sufficient powers to bind, in relation to third parties, the insurance undertaking;’;